Leaseholder previously admitted service charge. Can we apply for strike out?

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    Leaseholder previously admitted service charge. Can we apply for strike out?

    The way I understand it, if a leaseholder has previously agreed or admitted a service charge, the FTT has no jurisdiction to hear the case. Is the same true of a county court though? Can we ask a county court to strike out a leaseholder's defence and enter summary judgment on the claim if a leaseholder has previously agreed or admitted the service charge?

    The background is this:

    As one of the Directors of an RMC where the leaseholders do not own the freehold, I have made a Money Claim Online application to claw in money from a leaseholder that has failed to pay his contribution to some major works. The lack of payment from this leaseholder is holding up the commissioning of the major works - which (according to the lease) is long overdue. The errant leaseholder has entered a defence to our Money Claim Online application though and has requested that the case be transferred to the FTT. The reasons stated in his defence are that he feels that the major works are not necessary and he feels that the major works could be done more cheaply by another contractor.

    About 3 months ago however, when we were still wrangling to get contributions from the errant leaseholder, he sent us an email stating that he would be paying his contribution to the major works later that same day (nearly 5K) minus £250 for a previous wrong that he perceived the RMC had done him (this is all in his head and can be quite easily dis-proven). At any event, he must have had a change of heart because the money was never paid - despite a couple of reminders being sent to him.

    And yes, before you ask, we ran a full Section 20 consultation process before issuing the demand for payment. Other than nominating 2x contractors (both of whom we asked to tender for the major works) the leaseholder in question made no comment throughout the Section 20 consultation process until the demand for payment was made.

    My questions are these:

    1. Does the email that the leaseholder sent us 3 months ago qualify as an 'agreement or admission' of the service charge?
    2. If so, can we ask the court to strike out the leaseholder's defence and enter summary judgment on the claim?

    #2
    Paying doesn't acknowledge acceptance of the service charge, so, whilst it seems unlikely that the FTT will find for him, I would have thought that he could still transfer to the FTT, unless the email says he considers the charge valid. I think the admission option is more to avoid wasting time when the issue is inability to pay.

    At the very best you might have a test case.

    Also, what you are actually disputing is a payment on account, as you won't know the exact service charge amount until the job is done. The actual service charge could still be disputed on the basis of a contract variation, or on the basis that the work was not done to a proper standard.

    Comment


      #3
      Originally posted by leaseholder64 View Post
      Paying doesn't acknowledge acceptance of the service charge, so, whilst it seems unlikely that the FTT will find for him, I would have thought that he could still transfer to the FTT, unless the email says he considers the charge valid. I think the admission option is more to avoid wasting time when the issue is inability to pay..
      I agree that it is a payment on account that has been demanded (which the leases allow). I am also aware that payment of a demand does not signify that the demand has been agreed or admitted. I did not think that the agreement or admission element was as restrictive as you suggest though. I have always thought that the agreement or admission element was broad enough to encompass the example that I gave above e.g. where the leaseholder has stated in writing that he will pay the demand but subsequently reneges....

      Comment


        #4
        Of course paying (or agreeing to pay) does not constitute acceptance that the charge is correct. Quite the reverse in fact. When lessees take FH to FTT on grounds of a service charge dispute they almost ALWAYS pay that charge prior to the case (due to the cost implications of not doing so). Paying means nothing in this context (in and of itself).

        Paying does mean something in other contexts however (for example a tenant paying an agreed higher rate of rent month after a proposed rent increase in and month out has agreed that this is the rate of rent regardless of having been served with S13 notice.

        Comment


          #5
          Perhaps I should have added that the email that was sent to us 3 months ago stated that the costs were reasonable and that he would be making payment later that day (minus the £250) ...

          Comment


            #6
            a) What will you say if he denies sending the E-mail and claims that you sent an E-mail labelled as coming from him to yourself (perfectly easy to do).

            b) Stating that the costs are reasonable and that the works are not required is not necessarily mutually exclusive

            c) He is probably entitled to change his mind/.

            I see huge advantages in letting it go to FTT if you are sure of your case. Be sure to hire a lawyer and warn him that he will most likely be held be liable for costs if he loses and that those costs will at least double the amount he owes. Why are you resisting?

            Comment


              #7
              If he claims that we have somehow 'manufactured' the email - we can point to the lack of computer savviness of the RMC Directors (myself included!)

              If he denies having sent the email, we can point to the fact that he cc'd a handful of other leaseholders into the email and I am sure that these leaseholders would be prepared to back up this point as they are anxious that the works proceed as soon as possible.

              I thought that stating in writing that the costs are reasonable signified his agreement/admission of the cost.

              His lastminute.com argument (within his defence of our money claim) that the works are not required cannot be supported as we have untold records of water ingress to some of the flats from the poor condition of the exterior (the errant leaseholder included).

              His lastminute.com argument (within his defence of our money claim) that the works could be done more cheaply by another contractor cannot be supported since he himself nominated 2 of the 3 contractors that we asked to tender; the contractor we awarded the works to is the cheapest of the 3 that had been invited to tender for the works and in fact happens to be one of the 2x contractors that he himself nominated!

              The leases stipulate that we are obliged to redecorate the exterior every x number of years and that time is now due.

              I am pretty certain that we have all our ducks in a row and that the FTT should rule in our favour if the matter were transferred. As it appears however to be a 'slam-dunk' victory for us because the errant leaseholder has no case, we thought that we ought to save both parties' time and costs by asking for summary judgment. But perhaps you are right and we should simply give the leaseholder the day out that he so desperately wants to the FTT - with all the costs that would be coming his way whether we win or lose (the leases make provision for the recovery of any legal and admin costs associated with enforcing covenants).

              On the general matter of acceptance/agreement, I have just come across a UT case where the agreement/acceptance of a charge meant that the FTT had no jurisdiction: Avon Freeholds Ltd v Garnier [2016] UKUT 477 (LC) (31. There is a summary of the ruling in this Judge & Priestley link.
              When a tenant stated that a charge made by his landlord for entering into a deed granting retrospective consent to the tenant s alterations to his flat was fine...

              Comment


                #8
                AndrewDod,

                Not sure of the hiring a lawyer part, such costs are only recoverable IF the lease allows (most leases dont have such a clause, although most would have a s146/forfeiture costs clause, using this is very complex), costs are NOT recoverable under the standard FTT or Small Track courts regime.

                As to the main point above, its not clear there are court cases that go either way, what a LH should do if making payment is to add a paragraph saying it is without prejudice (although as pointed out out this isnt strictly necessary and it is common to pay amounts and then ask the FTT later if they are actually due/reasonable)
                Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                I do not accept any liability to you in relation to the advice given.

                It is always recommended you seek further advice from a solicitor or legal expert.

                Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                Comment

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